Mẹo Which of the following terms is best defined by the statement?
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Hà Quang Phong đang tìm kiếm từ khóa Which of the following terms is best defined by the statement? được Update vào lúc : 2022-11-06 10:24:05 . Với phương châm chia sẻ Thủ Thuật về trong nội dung bài viết một cách Chi Tiết Mới Nhất. Nếu sau khi Read nội dung bài viết vẫn ko hiểu thì hoàn toàn có thể lại Comments ở cuối bài để Ad lý giải và hướng dẫn lại nha.What Is a Profit and Loss (P&L) Statement?
Profit and loss (P&L) statement refers to a financial statement that summarizes the revenues, costs, and expenses incurred during a specified period, usually a quarter or fiscal year. These records provide information about a company’s ability or inability to generate profit by increasing revenue, reducing costs, or both. P&L statements are often presented on a cash or accrual basis. Company managers and investors use P&L statements to analyze the financial health of a company.
Nội dung chính Show- What Is a Profit and Loss (P&L) Statement? Key Takeaways How Profit and Loss (P&L) Statements Work Comparing P&L Statements Types of Profit and Loss (P&L) Statements Cash method Accrual method
Example of a Profit and Loss (P&L)
Statement Why are profit and loss (P&L) statements important?What is the difference between a P&L statement and a balance sheet?Are all companies required to prepare P&L statements? The Bottom Line
Which of the following term is best defined by the statement the underlying technology?Which of the following term is best defined by the statement the degree of uncertainty that the product will?What is the correct option in which terms the risk is expressed?What are the four possible options when responding to risk Mcq?
Key Takeaways
- The profit and loss (P&L) statement is a financial statement that summarizes the revenues, costs, and expenses incurred during a specified period.The P&L statement is one of three financial statements that every public company issues quarterly and annually, along with the balance sheet and the cash flow statement.When used together, the P&L statement, balance sheet, and cash flow statement provide an in-depth look
a company’s overall financial performance.Statements are prepared using the cash method or accrual method of accounting.It is important to compare P&L statements from different accounting periods, as any changes over time become more meaningful than the numbers themselves.
How Profit and Loss (P&L) Statements Work
The P&L statement is one of three financial statements that every public company issues on a quarterly and annual basis, along with the balance sheet and the cash flow statement. It is often the most popular and common financial statement in a business plan, as it shows how much profit or loss was generated by a business.
P&L statements are also referred to as a(n):
- Statement of
profit and loss
Statement of operationsStatement of financial results or incomeEarnings statementExpense statementIncome statement
The P&L or income statement, like the cash flow statement, shows changes in accounts over a set period of time. The balance sheet, on the other hand, is a snapshot, showing what the company owns and owes a single moment. It is important to compare the income statement with the cash flow statement since, under the accrual method of accounting, a company can log revenues and expenses before cash changes hands.
This document follows a general form as seen in the example below. It begins with an entry for revenue, known as the top line, and subtracts the costs of doing business, including the cost of goods sold, operating expenses, tax expenses, and interest expenses. The difference, known as the bottom line, is net income, also referred to as profit or earnings.
P&L management refers to how a company handles its P&L statement through revenue and cost management.
Grace Kim / Investopedia
Comparing P&L Statements
It is important to compare income statements from different accounting periods. The reason behind this is that any changes in revenues, operating costs, research and development (R&D) spending, and net earnings over time are more meaningful than the numbers themselves. For example, a company’s revenues may grow on a steady basis, but its expenses might grow a much faster rate.
Comparing one company’s P&L statement with another in the same industry that is similar in size can further help investors evaluate the financial well-being of a company. For example, doing so might reveal that one company is more efficient managing expenses and has better growth potential than the other.
Types of Profit and Loss (P&L) Statements
As noted above, a P&L statement may be prepared in one of two ways. These are the cash method and the accrual method.
Cash method
The cash method, which is also called the cash accounting method, is only used when cash goes in and out of the business. This is a very simple method that only accounts for cash received or paid. A business records transactions as revenue whenever cash is received and as liabilities whenever cash is used to pay any bills or liabilities. This method is commonly used by smaller companies as well as people who want to manage their personal finances.
Accrual method
The accrual accounting method records revenue as it is earned. This means that a company using the accrual method accounts for money that it expects to receive in the future. For instance, a company that delivers a product or service to its customer records the revenue on its P&L statement, even though it hasn’t yet received payment. Similarly, liabilities are accounted for even when the company hasn’t yet paid for any expenses.
You can find many templates to create a personal or business P&L statement online for không lấy phí.
Example of a Profit and Loss (P&L) Statement
Below is the income or P&L statement for 2022 and 2022 for hypothetical company Butterfly Industries. All of the figures are in U.S. dollar (USD) millions except per-share data:
You can use the income statement to calculate several metrics, including the gross profit margin, the operating profit margin, the net profit margin, and the operating ratio. Together with the balance sheet and the cash flow statement, the income statement provides an in-depth look a company’s financial performance.
Butterfly Industries P&L20212020Sales and revenues Sales of Machinery, Energy & Transportation 52,142 52,694 Revenues of Financial Products 3,042 2,962 Total sales and revenues 55,184 55,656 Operating costs Cost of goods sold 39,767 40,727 Selling, general, and administrative expenses 5,697 5,547 Research and development expenses 2,135 2,046 Interest expense of Financial Products 624 727 Other operating (income) expenses 1,633 981 Total operating costs 49,856 50,028 Operating profit 5,328 5,628 Interest expense excluding Financial Products 484 465 Other income (expense) 239 (35) Consolidated profit before taxes 5,083 5,128 Provision (benefit) for income taxes 1,380 1,319 Profit of consolidated companies 3,703 3,809 Equity in profit (loss) of unconsolidated affiliated companies 8 (6) Profit of consolidated and affiliated companies 3,711 3,803 Less: Profit (loss) attributable to noncontrolling interests 16 14 Profit [footnote 1: Profit attributable to common shareholders] 3,695 3,789 Profit per common share 5.99 5.87 Profit per common share — diluted [footnote 2: Diluted by assumed exercise of stock-based compensation awards using the treasury stock method] 5.88 5.75 Weighted-average common shares outstanding (millions) - Basic 617.2 645.2 - Diluted [see footnote 2] 628.9 658.6 Cash dividends declared per common share 2.70 2.32
Why are profit and loss (P&L) statements important?
A profit and loss (P&L) statement is one of the three types of financial statements prepared by companies. The other two are the balance sheet and the cash flow statement. The purpose of the P&L statement is to show a company’s revenues and expenditures over a specified period of time, usually over one fiscal year.
Investors and analysts can use this information to assess the profitability of the company, often combining this information with insights from the other two financial statements. For instance, an investor might calculate a company’s return on equity (ROE) by comparing its net income (as shown on the P&L) to its level of shareholder equity (as shown on the balance sheet).
What is the difference between a P&L statement and a balance sheet?
A company’s P&L statement shows its income, expenditures, and profitability over a period of time. The balance sheet, on the other hand, provides a snapshot of its assets and liabilities on a certain date. The balance sheet is typically presented as of the last day of the company’s fiscal year. Investors use the balance sheet to understand the financial strength of the company, comparing the amount and quality of its assets against its liabilities.
Are all companies required to prepare P&L statements?
Publicly traded companies are required to prepare P&L statements and must file their financial statements with the U.S. Securities and Exchange Commission (SEC) so that they can be scrutinized by investors, analysts, and regulators. Companies must comply with a set of rules and guidelines known as generally accepted accounting principles (GAAP) when they prepare these statements.
Private companies, on the other hand, are not necessarily required to comply with GAAP. Some smaller companies, though, may even not prepare formal financial statements all.
The Bottom Line
A P&L statement summarizes the revenues, costs, and expenses of a company during a specific period. It is one of three financial statements that public companies issue quarterly and annually—the other two are a balance sheet and a cash flow statement. Investors and analysts use financial statements to assess the financial health of a company and its growth potential.
Which of the following term is best defined by the statement the underlying technology?
Which of the following term is best defined by the statement: “The underlying technology on which the system is built is superseded by new technology.”? Explanation: Technology changes are common in the competitive environment of software engineering. 5.Which of the following term is best defined by the statement the degree of uncertainty that the product will?
(1) Performance risk—the degree of uncertainty that the product will meet its requirements and be fit for its intended use. (2) Cost risk—the degree of uncertainty that the project budget will be maintained.What is the correct option in which terms the risk is expressed?
Risk is expressed in terms of probability and impact.What are the four possible options when responding to risk Mcq?
Avoid occurrence of the crucial risk. Reduce or mitigate the occurred risk. Transfer the risk. Accept risk. Tải thêm tài liệu liên quan đến nội dung bài viết Which of the following terms is best defined by the statement?
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